Connecticut Dealers Seeking Moratorium On Store Remodeling

A recent report out of Connecticut underlines the financial burden of automaker-mandated renovations. Franchise dealers have to follow the refresh protocol given to them by the manufacturer, or risk losing OEM incentives. However, what kinds of considerations are given to how much an update will impact a dealer in the short term?

One of the considerations is transition time. Its not like the dealership is going to shut down for months for renovations. The store has to stay open amidst the renovations and ask their customers to “pardon their mess.” While many customers understand, it’s still a challenge for dealers according to Chris Veneklasen, President of A.J. Veneklasen Inc., which was recently working on a Ford and Maserati store remodels back in June 2014.

Veneklasen told MiBiz, “These remodels are a bit of a challenge for dealers because they have to stay in business.” One of the challenges for those dealers is to cut down the time their stores are in remodel mode. However, for progressive dealers who want to stay in step with their OEM, it’s part of life. Dan Scheid, the CFO of the Zeigler Auto Group told MiBiz, “We have been under construction constantly for the last 10 years. We have recognized that (doing renovations) are just a part of being part of the manufacturer and representing their brand and image.” While maintaining that brand and image is critical to stay one step ahead of competitors, some dealers in Connecticut want laws that help them get a break from constant remodels.

James Fleming, President of the Connecticut Automobile Dealers Association, told the Samford Advocate that there are ways to improve the current renovation process. Fleming said, “It’s really about giving the dealership time to recover the costs they expended as part of the renovation. We are also in negotiations with the manufacturers about allowing dealerships to purchase some of their supplies locally. There are millions of dollars spent by dealerships every year that could provide huge benefits to the state’s economy if they could use local suppliers and local vendors.”

On the other side of the debate are the automakers. Dan Cage, the Communications Director for the Alliance of Automotive Manufacturers, told the Samford Advocate OEMs should have a say in how dealers present their store and products. Cage said, “What we want is for our members to have an appropriate ability to influence the marketing, advertising and display of the product they create.”